from the strong-words dept

Over the years, we've covered Perfect 10's various lawsuits against all sorts of companies it accuses of copyright infringement for having some connection to images from old Perfect 10 magazines. For example, it's sued pretty much every search engine for hosting thumbnails of images that others scanned. It's also sued payment processors of paywall sites. To date, Perfect 10 has lost nearly all of these lawsuits. Its latest loss was against Rapidshare, where it failed to get an injunction against the site, after the court pointed out that Rapidshare is just a locker and doesn't even provide a search engine for people to find stuff. Also, quite damaging to Perfect 10's case was its failure to actually inform Rapidshare where the infringing content existed, or use the established process for asking content to be taken down.

Perfect 10 is a copyright troll that does not operate a real business and instead seeks to foster the spread of infringing copies of works that it owns over the Internet in order to entrap and shakedown websites and services where copies of its images may randomly end up.

Perfect 10 does not have the employees or attributes of a legitimate business. Today, Perfect 10 is essentially a paralegal service masquerading as a porn company. It is run by its founder, Norm Zada, out of his Beverly Hills home with the help of full and part time employees who are paid primarily to troll the Internet looking for (but not removing) allegedly infringing copies of Perfect 10 images for use in existing or potential future litigation and to draft declarations and other papers.

Perfect 10 is so litigious that Judge Matz of the Central District of California, before whom a number of Perfect 10 cases had been consolidated, has made it clear to Perfect 10 that it should not file any more lawsuits, which is why it filed this suit in the Southern District of California even though this district has no connection to the parties or the underlying claims.

From there, the filing goes on to make fun of Zada and his plans for Perfect 10 and his inability to copy Hugh Hefner's path to success in the porn publishing world -- suggesting that Perfect 10's problems in business had a lot more to do with the way the company was set up and run, rather than any online infringement:

From the start, Perfect 10's business model did not make business sense. Its Perfect 10 magazine (now defunct) was never competitively priced and therefore never garnered a large circulation. It featured less content at higher prices than competitive magazines. Similarly, Perfect 10 had little or no display advertising, which is a major source of revenue for magazines. Ultimately, perfect 10 could not compete with better run, better known publications that had ample advertisements.

The filing then goes on to suggest that Zada jumped on copyright infringement lawsuits as a business model, rather than as a method for protecting content:

Zada came to see litigation as a profit center, where the more Perfect 10 images were infringed online, the more money he and Perfect 10 could earn in settlements extracted through litigation or merely the threat of litigation. Accordingly, Perfect 10 does little or nothing to deter infringement, including exercising self-help or implementing other measure that legitimate copyright owners use to minimize online infringement, preferring instead to tacitly encourage the spread of its images as widely as possible over the internet.

There's a lot more along those lines, as the filing details how Perfect 10 seemed to go out of its way to make it more difficult for Rapidshare (and others) to remove the content it claimed was infringing -- points made by the judge in the original ruling rejecting the injunction request.

All of this is somewhat entertaining, but what is the actual legal claim? Rapidshare claims that these activities have caused harm to Rapidshare by forcing it into expensive litigation while also harming its reputation. So it's accusing the company of violating a California "unfair business practices" law -- which seems worryingly vague. Then there's a common law "unfair competition" claim, which also seems a bit vague. Unfortunately, as ridiculous as Perfect 10's lawsuits have been, I'm not convinced Rapidshare really has a legal leg to stand on in the countersuit. Either way, you can see the full filing below:

from the but-it's-not-a-complete-win dept

Earlier, we wrote about the ruling against Perfect 10 in its attempt to get a temporary restraining order on Rapidshare. As we mentioned at the time, the only details we had were based on Rapidshare's press release, that obviously presented it in the best possible light to Rapidshare. Thankfully, Christopher Harbin alerted us in the comments that he's posted a copy of the ruling and written up his own analysis. First, here's the ruling:

From the initial statements about the ruling from Rapidshare, saying that it could not be infringing since it was just the host, I had naturally assumed that the court found that Rapidshare was protected by the DMCA's safe harbors. But that is not the case. In fact, the court basically tosses out Rapidshare's safe harbor claim, because Rapidshare (bizarrely) has never set up an official DMCA agent -- which is necessary to qualify for the safe harbors. I would guess that Rapidshare's excuse for not doing so is that it's not based in the US, but if it's going to deal with lawsuits in the US, it's crazy not to have set up a DMCA agent (a very simple process).

That said, there are some interesting things (not all good) in the ruling. There were a few things that helped Rapidshare here. First, is that it does do things to takedown content it believes to be infringing. Second (and perhaps most interesting) is the fact that it does not index or promote the content stored on its service by itself. Since most file sharing services include a search engine aspect, the court concludes that this is a key element of suggesting that Rapidshare is not liable for direct infringement. That's an interesting ruling that could answer the question I've asked before about whether or not it actually is possible to create a site that allows for sharing of files that does not run afoul of the Grokster inducement rules.

The other thing that helps Rapidshare is that, despite being involved in a whole bunch of copyright cases, it still appears that Perfect 10 is somewhat incompetent in understanding copyright law and availing itself of tools to deal with infringement. In this case, Perfect 10 didn't send Rapidshare the specific links where infringing content existed. It just sent the company a bunch of files, but Rapidshare had no way to match those files to ones hosted in users' lockers. Even then Rapidshare still did try to find as many of the images as possible, even going so far as to do Google searches, and delete them. On top of that, Rapidshare has a tool that lets content owners indicate if certain files are infringing. Perfect 10 chose not to use that.

The one part of the ruling that I found troubling, however, is that the court did say that, even without being alerted to what's infringing, Rapidshare did have "specific knowledge" of infringing works on the site. This is a key point of dispute in the Viacom/YouTube case, where Google makes the argument that there's no way for it to know which works are really infringing and which are there on purpose. Yet, in this case, the court says that the service provider does have specific knowledge:

Thus, it appears that specific knowledge of direct infringement may exist even where an operator does
not have information that would allow it to search its contents and distinguish infringing from
non-infringing materials. Here, RapidShare received notice of hundreds of copyrighted Perfect
10 images that were found on its servers. The Court therefore concludes that RapidShare had
actual, specific knowledge of direct infringement.

Basically, it says that because Perfect 10 alerted Rapidshare to infringing content, then Rapidshare has "specific knowledge." That wasn't enough to meet the full inducement standard, so isn't a huge issue here, but that logic seems wrong to me. If that's all it takes to create "specific knowledge," then lots of user-generated content sites could be in trouble. So, if you want to cause trouble for any UGC site, you just upload content, and then alert the site that there is infringing content on the site, but don't tell them where it is or how to find it. I don't see how that's "specific knowledge" at all, but the court felt otherwise.

Finally, while I appreciate Christopher's analysis of the ruling, I have to disagree with his first two points. He doesn't understand why not having a search engine matters:

Although Rapidshare does not index its files, it basically punts indexing to third-party websites. It’s trivial to find infringing material hosted on Rapidshare and other file-hosting sites and I’m not sure why dicing up storage and indexing into separate entities which obviously have a symbiotic relationship should be able to avoid liability.

I think that's a slight misread of the ruling. It's not saying that Rapidshare gets to avoid all liability. It's just that it takes away Rapidshare's direct infringement liability, because it is not, in fact, setup to make it easy for people to find that content. The fact that others have made it easier to find that content should not be blamed on Rapidshare.

Second, Christopher notes:

I'm not at all convinced that in all cases plaintiffs should be forced to ferret out all infringement on a defendant's website. As the law stands right now, copyright holders have to employ an army of people to constantly monitor defendant's site for infringement.

To which the obvious response is, why should that burden fall on the defendants? If it takes plaintiffs "an army of people," it would actually take the defendants significantly more than that, complicated by the fact that the defendant has no way of knowing if the content has been uploaded legitimately or is an infringing copy.

from the have-they-ever-won? dept

Ah, Perfect 10. The adult content company has spent the last decade or so engaged in one copyright lawsuit after another, accusing pretty much every search engine out there of copyright infringement for hosting thumbnails of images that others uploaded. It has lost repeatedly. And yet, it keeps on suing. At some point, you have to wonder if its legal budget might have been better spent on, I don't know, actually innovating and giving people a reason to buy. It looks like yet another of its legal theories isn't working out so well in court. paperbag was the first of a few of you to send in the news that the district court in California's Southern District has refused to grant an injunction against Rapidshare, suggesting that, as a mere file locker, Rapidshare would not be liable for the infringement done by its users.

Amusingly, the ruling came out just a day before a bunch of US politicians tagged Rapidshare as one of the worst copyright offenders out there, and suggested sanctions should be made against Germany for not stopping Rapidshare. Funny, then, that a US court also doesn't seem to think Rapidshare is breaking copyright law...

Of course, this was just the ruling over the request for a preliminary injunction. TorrentFreak's headline jumps the gun a bit in saying a court found Rapidshare "not guilty" for infringement. It sounds like we haven't quite reached that stage yet. This was just a request for an injunction before the actual case goes to trial. That said, at this point, I can't find a copy of the actual ruling, and the only information to go off of is Rapidshare's own press release, which states "The court rejected the application in its entirety. In its ruling, the court stated that as a file-hosting company, RapidShare cannot be accused of any infringements of copyrights." That sounds like the court said Rapidshare qualified for DMCA safe harbors, but without the full ruling, we don't know for sure -- and it's entirely possible that Rapidshare is exaggerating the ruling.

If anyone has access to the actual ruling, and are willing to share it, it could be interesting (and potentially relevant to other ongoing cases, such as the Viacom v. YouTube case). Once I've seen a copy I'll either update this post or post again, if the details warrant a separate post.

from the reason-amongst-the-insanity? dept

RapidShare, the digital file locker service, has come under fire a lot lately by the entertainment industry as the latest in a long line of online services that are used for unauthorized file sharing. There have been a bunch of lawsuits in Germany over the site, and a series of rulings against the company, including orders that it proactively monitor content being hosted on the site, that it magically know which songs are infringing and which are authorized, and that it block the upload of certain files or have its staff face jailtime.

Filtering based on keywords is not effective since that would result in many false positives, the Court noted. Likewise, manually reviewing uploaded content is not deemed feasible because RapidShare does not have the manpower to do this.

Another suggestion, banning file formats such as RARs, was also tossed out since this file type says little about whether a file is copyrighted or not. RAR is simply a format used to compress data, regardless of the copyrighted status of the files, the court explained.

It's not clear whether or not this will actually have much impact on some of those other lawsuits, but it's still nice to see at least one sensible ruling.

from the misplaced-blame dept

Having already been told by a German court that it needs to magically know what songs infringe and which do not, file storage locker site RapidShare was already facing some difficult legal issues in that country. And now that company faces another problem. It's been ordered by a German court to figure out a way to proactively block the upload of 148 titles. Of course, the company can try to do some fingerprinting, but there are always ways around things like that -- and that creates a huge problem for RapidShare. Because if one of its users figures out how to upload one of these books, RapidShare takes the blame -- in the form of $339,000 fine and 2 years of jailtime for execs for each instance that a forbidden work gets through. In what world does it make sense to hold the execs of a company criminally liable for something done by the users of the site?

from the good-luck dept

Well, people have asked in the past how Google and Microsoft's search engines are really all that different from some of the file sharing search engines, and now we've finally got a lawsuit to at least explore some of that. It's not a major label, but a small indie blues label called Blues Destiny is suing Google and Microsoft along with RapidShare. At issue, of course, is that people are uploading Blues Destiny music to RapidShare, and searches via Google and Microsoft can find them. As Eric Goldman notes in the writeup linked above, the label isn't particularly clear in what it's upset about, so he believes the real issue isn't even that Google and Microsoft link people to RapidShare, but that it finds other sites that then link to RapidShare. That seems like many degrees removed from actually infringing -- and it's difficult to even see a clear claim for "inducing" infringement. Goldman also notes that the lawsuit is complicated by Blues Destiny's imprecision and vagueness in a series of (increasingly exasperated) takedown notices, which is coupled with Google not complying -- but potentially that is due to the failure of Blue Destiny to properly state what needed to be taken down. Either way, it's difficult to see how either Google or Microsoft is going to be found liable here, but the lawsuit is still worth watching, given the questions about where the fine line is drawn between just being a search engine and being a contributory infringer.

from the how's-that-going-to-work? dept

Last year, the German music collection society GEMA sued Rapidshare claiming that the company had to filter out any infringing content. Of course, this makes little to no practical sense. Rapidshare is a platform that users use to share content. Rapidshare itself has no way of knowing whether the content is infringing or not, and any liability should be on the users, not the platform. But... courts don't always understand such things, and so a German court has now ruled that Rapidshare must stop certain songs from being distributed. GEMA, of course, is thrilled, noting that this means the copyright holders are "no longer required to perform the ongoing and complex checks." But, it means that Rapidshare not only has to perform ongoing and complex checks, it has to do so without having any information on what's legit or not. What if musicians want to share their music that way? What if the use is fair use? RapidShare appears ready to appeal, noting that appeals courts on these issues have been much more reasonable, so they're hopeful that the decision is reversed or greatly limited.